First of all a disclaimer:
Currently, I'm broke. Very, very broke. I'm pretty sure my eight-year-old bother currently has more money saved than me, and his income is made up mainly of Tooth-fairy money.
Unfortunately, the Tooth-fairy is no longer a suitable income option for me now that I no longer have baby teeth.
Putting aside the fact I'm broke at the moment, in the past, I've saved capably enough to be able to fully fund an intensive film "Apprenticeship" in the big city. I was financially prepared to live in Auckland, unpaid for six months.
That is not something most seventeen-year-olds can say. And when I started saving I was sixteen. So I'm not saying my saving method is the best, but it did work for me very well, and it's easy to understand.
When I first started looking into saving, I did the usual thing, I googled it.
I was met with pages and pages of very analytical, wordy, professional blogs that had so many complicated infographics, you needed another whole infographic to understand the first one.
Instead of deliberately confusing you, to make myself sound smarter, I'm going to just break down my method into an easy and simple formula.
First up some important vocabulary:
Income = Money you are getting from other people. That could be the tooth-fairy but it's probably from your employer if you have a job.
Expenses = Things you need to pay, such as rent or a subscription to Squarespace.
The Three Catagories
Fun Fund = This is money you can spend without guilt. It's your movie night money or coffee date money.
Squirrel Fund = This is the money you're saving. Not really for any particular reason, but maybe you want to buy a car one day.
F**k You Fund = This is the money that's for if you suddenly get sick or if you are in a different country and you need to buy an urgent plane ticket home. This is the money you can use to give the middle finger to whatever is threatening your safety or happiness and only under dire circumstances should it be spent.
Now some depressing math:
Let's pretend your income is $100.
First - Subtract your expenses from your income. Let's pretend you have to pay Mum and Dad $20 rent.
That leaves you with $80.
Second - Subtract %80 of whats left and pretend you're putting it in a pile off to the side. This percentage you can change depending on how frugal you want to be. When I started saving, I was doing %70 and then a few weeks before I left I was doing %95. But I think %80 is a really good all arounder.
Third - More math: 80 - 64 = 16. Which means there is $16 in your Fun Fund from this income.
Forth - Going back to that amount, the pile on the table: %80 of $80 = $64.
This will go into your Squirrel Fund.
Because I don't have another account opened for my F**k You Fund, I do the calculation and then just make note of it etc. But if you had a separate account you could do this.
- 64 - %20 = 12.8
Which means, that from this income, $12.80 is going into your F**k You Fund.
To sum up:
- Subtract Expenses
- Subtract Squirrel Fund %80
- The F**k You fund is %20 of your Squirrel Fund amount
- Fun Fund is that %80 subtracted from whatever number is left over after you subtracted your expenses.
Another example would be if your leftover income, after expenses subtraction, was $200 and you subtracted %80, you're left with $160.
The $160 is your Squirrel and F**k You fund and the $40 difference is for your Fun Fund.
Thanks for reading..!